Taking a loan has become easier, with the new rule of RBI, common people will get loan up to Rs 5 lakh, know how, RBI has made crores of people happy.
The Reserve Bank of India (RBI) has recently made a big change in the rules for small loans, which has increased the possibility of the general public getting loans up to ₹ 5 lakh easily. Earlier, CIBIL score was considered the main basis for giving loans, due to which people taking small loans often had to face problems. Under the new rules, banks will now relax the strict CIBIL score conditions for small loans and will also take into account other aspects such as income, job stability. This will benefit those who were unable to take loans due to low credit score.
RBI’s objective and its impact
RBI’s objective is to promote financial inclusion for small loans so that more and more people can connect with the banking system. Small businessmen, freelancers and salaried people whose needs are up to ₹ 5 lakh loan, will now be able to take loans without much complications. This policy will also boost the country’s economy as small and medium businesses will be able to expand due to the availability of capital. This will increase employment opportunities and reduce economic inequality. However, banking institutions will also have to pay special attention to risk management.
Changes in CIBIL score rules
Earlier, lenders considered CIBIL score to be the most important for loans up to ₹ 5 lakh, and avoided giving loans to applicants with low scores. According to the new rules, now banks will not depend only on CIBIL score. They will also look at the income, employment stability and other financial status of the applicants. This will enable more people to get loans without complications. However, the importance of CIBIL score will still remain in loans above ₹ 5 lakh. This change will bring flexibility in the loan process and benefit the needy.
Changes will come in the loan process
After the new rules of RBI, the process of loan application will be expedited. Banks will reduce paperwork and simplify the application through digital means. This will not make the applicant wait long and filing will also be easy. With the use of digital platforms, people from rural and remote areas will also be able to avail this facility. This will save both time and cost. Banks will make their approval process more transparent and faster, which will improve the customer experience.
Impact on the economy
Easy availability of small loans will accelerate the country’s economic activities. Small and medium businesses will now get rid of the problem of lack of capital, which will enable them to create new employment opportunities. This will promote economic inclusion and help reduce inequality. However, the banking sector will have to be cautious due to the increasing loan risk so that non-performing assets (NPAs) do not increase. Proper credit assessment and checking the ability to repay the loan will be necessary. This step will be important for India’s economic stability.
Challenges and precautions
The new rules will increase the number of loan takers but it can also increase the risk. There is a higher risk of default when loans are given to customers with low credit scores. Therefore, banks and financial institutions will have to do a thorough investigation before giving loans. Also, customers will also have to understand their financial responsibility. It will be necessary to repay the loan on time and improve the credit score. Without the right advice and financial awareness, this rule will not be beneficial. The true benefit of this change will be available only when both parties fulfill their responsibilities.
Benefits for the general public
RBI’s new rules are very beneficial for the general public. Small loans will be easily available so that people can meet their small financial expenses like education, health, business or other important needs. People in rural areas will also benefit from easy loan application through digital means. This rule will increase economic independence and improve the standard of living of the people. Along with this, the tendency of people to improve credit score and increase financial understanding will also increase, due to which they will be in a better financial position in the long term.
Precautions while taking a loan
Although taking a loan has become easier now, caution is still necessary. Taking more debt only due to easy process can create financial problems. One should always take loan according to his financial capacity and budget. Read the terms and interest rates of the loan carefully. Make a habit of paying EMI on time so that your credit score does not get spoiled. Only by taking a loan responsibly, this new rule will strengthen your financial position and protect you from financial crisis.
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